Business is all about relationships. It is the people on your team who will help you navigate uncertain waters and survive economic volatility.
A key member of your team is your lender. How do you and your lender work together to overcome continued financial stress? Here are some helpful strategies to make this relationship work best.
Treat your lender as a partner.
“Your lender should be an indispensable partner in helping you grow your operation,” says Jessica Lehman, managing director of agribusiness banking, First Financial Bank in Fort Wayne, Ind. “You want someone who can provide perspective that will be both honest and beneficial.”
Be a good at communicator.
During 2019, you may have a tough conversation with your lender. “Take every opportunity to communicate in a positive, proactive manner,” encourages Val Farmer, a clinical psychologist and author who has specialized in rural mental health during his 30-year career. “Your lender should hear about your problems directly from you. Be quick to communicate openly about your situation.”
Honesty is vital during these conversations. “Trust is the cornerstone of all good relationships,” he says. “Your straight-forward dealings will stand you in good stead with your lender as in life.”
Check your emotions at the door.
“There are so many factors outside of a farmer’s control that it is easy to feel angry, upset and frustrated,” Farmer says. “The hard work of farming and ranching isn't always rewarded.”
But, taking out your frustrations on your lender won’t make the situation better. “Your lending institution is trying to survive in that same environment,” he says.
If you become overloaded or frustrated, ask to take a break. Use good body language to show you are listening. This includes leaning forward, eye contact, posture and welcoming facial expressions. Be respectful and stay focused on your farm’s numbers and goals.
Ask for honest and constructive input from your lender.
Ag bankers have a front-row seat to numerous farms. This distinct vantage point can help you improve your farm business, explains Alan Hoskins, president and CEO of American Farm Mortgage & Financial Services.
“Be upfront with your banker that you know you need to sharpen your management skills,” he says. “Ask your lender to give you some guidance and thoughts on how you can ensure the success of your operation.”
Explore all the options your bank can provide.
In the current tough financial landscape, you may need to use new lending tools and options. Understand what your lender can offer, Lehman encourages. It’s not just about your relationship with your relationship manager, but also about your relationship with your financial institution.
Determine your bank’s structure, lending limits, expertise level, products, covenants, interest rates, value-add options and its dedication to the farming industry.
“Figure out what kind of relationship you can have with that bank,” she says. “Does it match your goals? What do you want from a bank? Can you negotiate structure and rates? Advocate for your operation’s needs and understand what solutions are available.”
Also, be sure your lender has your best interest at heart, Farmer adds. “Not everybody hits it off,” he says. “Personality clashes can get in the way of business. If for some reason you don’t get along with a particular lender, don’t be afraid to ask for a change. It is the relationship that makes this work.”